Overhaulin'

Is it possible to refinance a upside down car loan?

Public Comments

1. You can do it, as long as you can qualify for the loan amount. But why would you want to? You'll just end up paying alot more in the long run.
2. doubtful, unless you have the the money to make up the difference and I doubt if by some miracle you got refinancing, you wouldn't really save any more than a couple of bucks a month
3. This only depends upon your credit history / score. If you have a high enough credit score then you might be able to find a financial institution that is willing to refinance. However, I'm assuming you want to refinance to lower your interest rate and therefore it may be difficult to do so. Here's why. Interest rate is determined by the associated risk with the loan. The higher the risk of non-payment the higher the interest rate. Having a loan made using inadequate collateral (upside down in the car loan) is going to raise the risk factor. So, unless you can offset this risk through either a REALLY good credit history/score or a down payment or both, you probably won't be able to reduce the interest rate. Hope this helps and good luck!
4. Wow, I don't think so. Sometimes a person can borrow more than 100% on a home loan but that is only because the home will appreciate in value thus reducing the risk to the lender. For an automobile, which I am sure you are painfully aware now, depreciates in value and is why the note is upside down. The bank will only lend you the purchase value on the car note if you have good credit. They, the bank, have to find someway in their calculations to reduce the risk to make it worth their while to loan the money at a given interest rate. This is what we do when you, I and everyone else invests, we would only invest in situations that would return us an equal amount relative to the risk we are taking with our money. This is also weighed relative to what would be considered the Risk-Free rate. There may be a high risk lender out there somewhere that might loan you more than the car is worth but just as my examples above state, this will be at a significantly greater interest rate to offset the risk of default on the loan. You might could call Drive Time. I know they loan money on automobiles for high credit risk consumers. Good Luck!
5. You could do it